Previously, it took a while to amass $5 billion in assets under management. Not so for Lead Edge Capital, a 12-year-old California and New York-based private equity firm that just topped that amount, closing its sixth and newest fund with a whopping $1.95 billion. dollars of capital commitments from approximately 500 investors.
The pool follows a $950 million fund that Lead Edge closed in October 2020 – also from around 500 investors – and which grew the company’s assets at the time to $3 billion. (Lead Edge also runs a $150 million “public-only” fund that it created at the request of its investors last year, according to company founder Mitchell Green.)
Even at a time when money is flowing freely to tech investors — as mentioned on Monday, venture capital firms handle more money than outsiders realize — the amount is notable.
The company credits recent releases in part, including fashionable medical wear retailer Figs, which went public last May; the direct listing of workplace collaboration software company Asana last September; the highly successful IPO of dating service Bumble in February last year; and the October 2020 sale of security monitoring company Signal Sciences to publicly traded company Fastly for $775 million in cash and stock. (According to Crunchbase data, Signal Sciences had raised about $60 million from investors.)
Earlier returns were from Alibaba’s IPO, Spotify’s IPO, and the sale of Duo Security to Cisco. Green said the company invested $300 million in Alibaba in the years leading up to its IPO; more than $150 million in Spotify in the years leading up to its IPO; and over $90 million in Duo.
Big bets are not unusual for Lead Edge, which has long prided itself on building on the investments it makes. “In the private world, we’ll run a fund with, say, 20 investments,” Mitchell told us in a podcast conversation in January. When it comes to public companies – which Lead Edge supports with its public company fund, the occasional special purpose vehicle, and also up to 25% of its main fund – the team takes an even more distilled approach. “You should think of our public fund as wanting to hold 5-10 positions. We run it concentrated.
Not all of these investments went as planned. Although Lead Edge has poured $160 million over the years into Alibaba subsidiary Ant Group – which was set to become the world’s largest IPO in fall 2020 – this bid was completely derailed by China’s securities regulator. securities and it’s not clear if Lead Edge will ever get its most money.
Green, who cut his teeth as an associate at Bessemer Venture Partners and a Tiger Fund subsidiary called Eastern Advisors, said he wasn’t worried. When we spoke in January, he said Lead Edge hadn’t sold any shares, had no interest in selling its shares, and was even considering “buying more.”
Indeed, Green and his team see China-based startups as a huge buying opportunity precisely because they’ve been hit so hard by China’s tech crackdown. Who saw them come together secondary shares of TikTok’s parent company, Bytedance, from former backers and pouring more money into Alibaba, which is “ridiculously cheap right now,” as Green noted during our chat. (For months, shares of Alibaba were trading at around $110 each, around the same price they traded two months after the company went public in 2010; days before China tear it off $37 billion Ant Group’s IPO in November 2020, they were trading at $310 per share.)
Clearly, the company’s approach to firearms is appealing to Lead Edge’s many backers, including former Xerox CEO Anne Mulcahy, former Charles Schwab CEO David Pottruck, and former ESPN CEO Steve Bornstein. (Even a neighbor of this publisher, after hearing this recent podcast, revealed that Green was managing some of his money and said he was happy with his feedback.)
One limited partner – Bill Grabe, retired CEO of General Atlantic – told the WSJ in 2017 of Green: “It’s the energy, isn’t it? I’ve never met a guy who talks so fast and seems to make sense.
Green, Grabe added, “saved me a lot of money.”